Four Questions Before Purchasing a Travel Insurance Policy

Before finalizing your travel plans and dishing out the dough for the perfect getaway, you might want to consider a travel insurance policy to protect your prepaid, nonrefundable expenses. While your vacation will hopefully be restful, remember that flights can be delayed, tours can be cancelled, family members can get sick, and luggage can go missing.

A package insurance policy—sometimes called trip insurance or a trip plan—usually features the most coverage in a single plan by bundling multiple types of coverage into one. This often includes coverage for cancelled or interrupted trips, medical emergencies, emergency evacuations, and lost luggage.

“[A package insurance policy] is a full suite of coverage, and that’s the most common,” says Jim Grace, CEO of insuremytrip.com, which acts as an insurance agent. “Many of the other areas of coverage or types of policies are monolithic and focus on specific coverage.”

Travel insurance typically costs between 5 percent and 8 percent of the insured trip, depending on factors like the type of plan and age of the traveler.

Whether you are shopping for a package policy, a travel medical plan, or a specialty policy designed for adventure travelers, ask yourself these four questions to help you with your purchasing decisions.

1. Is there a chance you might have to cancel your trip?

Whether you are staying within the country or traveling abroad this spring, ask yourself if there is any chance you might have to cancel your trip, especially if you are considering a package policy.

The cancellation coverage is usually what makes a package policy more costly than other plans, says Damian Tysdal, founder of Travel Insurance Review, an online travel insurance resource. But, he adds, extensive cancellation coverage is difficult to find anywhere else.

If you have to cancel your trip because of a weather disruption, a family member getting sick last minute, or an emergency at work, for example, your travel insurance could cover the lost costs.

2. Are you paying for travel activities in advance?

When considering the risk of canceling your trip, also think about how much money you will be paying before you even depart—for cruises, airfare, hotels, or organized tours, for example.

“Cruises and tours are notorious for bad cancellation policies,” Tysdal says. “At least with most airlines you can rebook the flight for a fee so there is some recourse there. With cruises, if you cancel anywhere within a month, I think you are losing at least 75 percent of the cost.”

On the other hand, if you are taking a spontaneous trip with minimal prepaid costs—such as if you are only paying for airfare—you may feel that you can absorb the cancellation risk on your own.

3. Are you traveling outside of the U.S.?

If you are traveling to an overseas destination, consider your medical coverage. Not all medical insurance plans provide worldwide coverage, according to Grace. Plus, if you are out of network for your policy, you could be faced with a large deductible. It’s important to note that Medicare recipients receive no international medical coverage.

Companies that provide travel insurance have networks of doctors and hospitals pre-screened around the world so they are equipped to manage your care abroad. If you are hurt overseas, medical evacuation coverage will take you to the nearest appropriate hospital to receive treatment or bring you home.

4. Is your trip covered through other types of insurance?

Some credit cards come with travel insurance as an added feature, but it may have a low annual limit. Check with your credit card company to see if the insurance provided meets your spring break needs.

If you are traveling domestically, your health insurance should have you covered most of the time, but make sure to familiarize yourself with your out-of-network deductibles.

Instead of coverage for lost luggage, your homeowners or renters insurance may cover off-premise theft, but again, check into the amount of the deductible. You may have to list specific items on your policy in order for them to be covered.